GAZA CITY (AFP) — Israeli troops and Palestinian gunmen fought fierce night-time clashes around the Gaza Strip early on Tuesday, as a war on Hamas that had killed more than 900 Palestinians entered its 18th day.

Hamas's armed wing, the Ezzedine al-Qassam Brigades, told AFP its forces had destroyed two Israeli tanks in the Gaza City neighbourhood of Zeitun, using rocket-propelled grenades (RPGs).

They also said a number of soldiers were killed in the village of Khuzaa, east of Khan Yunis near the Israeli border. But an army spokesman denied any tanks had been knocked out and said there was no report of Israeli casualties.

Medics said one Palestinian was killed by tankfire in Zeitun. It was not clear whether the victim was a fighter or civilian.

As the world awaited a threatened intensification of the offensive by Israel, the defiant leader of Hamas in the Gaza Strip vowed that the Islamists would emerge victorious.

Ismail Haniya made a rare televised address on Monday only hours after Israeli Prime Minister Ehud Olmert threatened to hit Hamas with an "iron fist" if it did not end the rocket attacks which the war aims to halt.

"We are approaching victory," said Haniya, head of the Hamas government in Gaza, which the Islamists seized from forces loyal to moderate Palestinian president Mahmud Abbas 18 months ago.

"I tell you that after 17 days of this foolish war, Gaza has not been broken and Gaza will not fall," he added, speaking from an undisclosed location.

Haniya also said the "blood of children" who have been killed in the conflict would serve as a "curse which will come back to haunt" US President George W. Bush.

Bush has consistently blamed Hamas for the conflict, saying that while he wanted to see a "sustainable ceasefire," it was up to Hamas to choose to end its rocket fire.

Israel and Hamas both ignored a UN resolution -- on which the United States abstained -- which called last week for a truce.

The focus of peace efforts is now on an Egyptian proposal for an immediate ceasefire to allow humanitarian aid into Gaza, talks on opening Gaza's border crossings and taking steps to prevent arms smuggling.

Olmert said Israel's key demands were non-negotiable.

"We want to end the operation when the two conditions we have demanded are met: ending the rocket fire and stopping Hamas's rearmament. If these two conditions are met, we will end our operation in Gaza," he said.

"Anything else will meet the iron fist of the Israeli people, who are no longer ready to tolerate the Qassams (rockets)."

An army spokesman said nearly 30 missiles had been launched from Gaza on Monday, but no casualties were reported.

Residents said Israeli tanks already on Monday punched their way to the southern rim of Gaza City, advancing several hundred metres (yards) into the neighbourhoods of Ash Sheikh Ajlin, Tuffah and Zeitun.

"We are tightening the encirclement of the city," the offensive's commander, Brigadier Eyal Eisenberg, told reporters. "We are not static. We are careful to be constantly on the move."

In the hours after midnight, witnesses said the tanks had moved further in to Ash Sheikh Ajlin, Zeitun and a third neighbourhood, Tal al-Hawa, and were coming under mortar and RPG fire.

A military spokesman said warplanes had hit more than 60 targets on Monday, including 20 weapons-smuggling tunnels in Rafah, on the Egyptian border, and nine rocket launch sites.

Palestinian prime minister Salam Fayyad, whose remit is limited to the West Bank, said the Egyptian initiative offered the best hope of peace, putting pressure on both Israel and Hamas to respond positively.

"He who refuses, voices reservations or moves slowly on this initiative bears the responsibility of explaining themselves, especially to the people of Gaza," he said.

Arab League chief Amr Mussa said the bloc's foreign ministers would meet on Friday in Kuwait to discuss the conflict.

And UN chief Ban Ki-moon, who is to head to the Middle East on Tuesday, called on Israel and Hamas to immediately stop the fighting, saying "too many people have died."

Meanwhile, Israel suffered a reverse at the hands of the UN Human Rights Council, which adopted a resolution accusing it of "grave" human rights violations against Palestinians.

Attention was also focusing on the task of rebuilding Gaza after the war, with the Czech Republic, which currently holds the revolving EU presidency, saying it would convene a donor conference to address humanitarian needs.

Aid deliveries have been massively disrupted by the conflict, with agencies warning that residents are running out of food and even having to burn their furniture to stay warm in the bitterly cold nights.

By late Monday, Palestinian medics said at least another 26 people had been killed, bringing the overall Palestinian death toll to 918, including 277 children. Another 4,100 have been wounded.

Ten Israeli soldiers and three civilians have been killed in combat or by rocket attacks since the operation began on December 27.

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If you prick us, do we not bleed? if you tickle us, do we not laugh? if you poison us, do we not die? and if you wrong us, shall we not revenge? m.of v. w.shaka speare

LONDON (Reuters) - The United States welcomed Israel's ceasefire in the Gaza Strip and said it expected all parties to stop hostile actions immediately while the United Nations expressed relief.

Iran said the ceasefire was not enough and that Israel's military must withdraw, Turkey urged Western countries to engage with Hamas, and the pope urged the world to pray for peace in Gaza and the hundreds killed in the conflict.

"The goal remains a durable and fully respected ceasefire that will lead to stabilization and normalization in Gaza," Secretary of State Condoleezza Rice said after Israel called off its three-week offensive in the area.

"The United States commends Egypt for its efforts and remains deeply concerned by the suffering of innocent Palestinians," she added. "We welcome calls for immediate coordinated international action to increase assistance flows and will contribute to such efforts."

Hamas announced an immediate ceasefire by its fighters and allied groups in Gaza on Sunday, senior Hamas official Ayman Taha told Reuters, adding that the Islamists gave Israel a week to pull out its troops.

U.N. Secretary-General Ban Ki-moon welcomed the Israeli ceasefire and urged Israel to withdraw all of its troops.

"I am relieved that the Israeli government has decided to cease hostilities," Ban told reporters. "This should be the first step leading to the full withdrawal of Israeli troops from Gaza," he said, adding he wanted the withdrawal "as soon as possible."

He said Hamas militants also needed to do their part to bring an end to the violence by halting their rocket attacks against southern Israel. "Hamas militants must stop firing rockets now," he said.

U.S. President-elect Barack Obama welcomed Israel's ceasefire and will say more on the situation in Gaza after he is inaugurated on Tuesday, his spokeswoman said.

Israel declared a unilateral ceasefire which took effect at 2 a.m. (0000 GMT) on Sunday. Within hours, five rockets were fired at the Israeli town of Sderot, causing no casualties. Hamas announced its ceasefire later on Sunday.

EGYPT TALKS

European leaders and Ban will attend talks in Egypt on Sunday aimed at bolstering the ceasefire.

"Israel must allow full access to humanitarian workers, and to relief supplies," British Prime Minister Gordon Brown said en route to the summit. "We must also end Gaza's economic isolation by reopening the crossings that link it to the outside world."

"The priority now is to ensure that no more civilians die as a result of this conflict," the Czech EU presidency said in a statement welcoming the ceasefire.

"It is vital, therefore, that all required humanitarian assistance, including food, fuel and medical aid is freely and rapidly delivered into, and distributed within Gaza." Continued...

Iran's Foreign Minister Manouchehr Mottaki said the ceasefire announcement showed the "victory of the Islamic resistance and the heroic people of Gaza" against Israel, the official IRNA news agency reported.

"The mere halt in air, sea and land attacks, without the withdrawal of the (Israeli) forces from the occupied positions, would not be enough for the cessation of confrontation," Mottaki said. "It is necessary that the Zionist forces leave the occupied regions," he said, calling their presence "provocative."

Turkish Prime Minister Tayyip Erdogan criticized world leaders for leaving Hamas out of the peace process, saying it was a democratically elected political party. cont...

JERUSALEM, Jan. 27 (UPI) -- Israeli officials are closely watching to see if Egypt stops a vessel believed to be delivering Iranian arms to Palestinian militants in Gaza, sources say.

The suspect Iranian ship was docked at an Egyptian Red Sea port Tuesday and is not being allowed access to the Suez Canal, unnamed military sources told the Jerusalem Post.

"This is a big test for the Egyptians," the unnamed senior defense official said. "So far the Egyptians have prevented the ship from crossing the Suez and we hope it will stay that way."

Sources told the newspaper defense officials believe Iran is trying to supply the militant group Hamas with new Grad-model Katyusha rockets and to replace high-grade explosives that were used against the Israeli troops during its 22-day military incursion into the Gaza Strip.

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If you prick us, do we not bleed? if you tickle us, do we not laugh? if you poison us, do we not die? and if you wrong us, shall we not revenge? m.of v. w.shaka speare